Aligning a financial services firms with proper technology is more critical than ever. The days when an advisor could get by without using technology are over. Financial services firms are typically not technology experts and being able to confidently choose the right technology platform is not a skill that most firms have in house. I’ve developed a process for choosing technology based on years of experience in technology consulting with Accenture, selecting technology working for MasterCard, and leading technology and operations at the financial services firm Matter Family Office. Included in this blog post is a framework and tips from that experience for selecting technology vendors for financial services firms.

Requirements gathering is the first phase of a good technology selection process. A key component of that phase is to spend time internally to deeply understand the business problem your firm is trying to solve. This should be done before engaging with vendors. It is very easy to get enamored with the bells of whistles of vendor products without deeply understanding what is important to your firm. Too many firms get enticed by cool features that they never use. Doing brainstorming sessions and requirements gathering before engaging vendors helps to take control of the conversation with vendors and focuses the conversations on your needs. Once the requirements are completed, these will be turned in to a Request for Information (RFI) to send to vendors which will scored.

For the vendor selection phase of the project it is critical to have a disciplined process to make the final vendor selection. This includes narrowing vendors to a few finalists, having productive vendor demos and discussions, and negotiating with vendors for terms and conditions that favor the firm. Having a plan for making the final vendor selection helps prevent analysis-paralysis and improves the odds of making a good selection for your firm.

Requirements Gathering

A good requirements document is key to a successful vendor selection process. This should include documenting items that are important to your firm. This can be done through brainstorming sessions and research. To facilitate the brainstorming session, it helps to bring a few questions to the table to help get the thinking process started for the team. A few questions I like to use at brainstorming sessions are:

• I wish our current system did…
• I love feature x in the current system…. 
• I really like how easy it is in the current system to do …. 
• We can’t lose x in the new system
• Wouldn’t it be great if we could …
• X takes too long in the current system; it would be great if this was easier/faster
• I’ve seen this cool feature in another system that would be great if we had in the future

The requirements document should also have sections for items like security, integration, and support to include more than just functional requirements.   I’ve developed a requirements template that I use for technology selections that includes all of the important components for an evaluation.

Once the requirement document is complete it should be packaged in to a RFI to provide to vendors to learn more about each firm. This allows vendors to respond to your requirements and provide detailed answers to determine how their offering matches up with your needs. I typically recommend giving the vendors a few weeks to answer the RFI. This give them time to clarify requirements as well as timf for you to get to know the vendors more deeply.

As part of the process to complement the RFI, I recommend creating a vendor scorecard. This puts the components of the requirements document into a spreadsheet and scores each of the vendors on each requirement. In addition to having a place to score each vendor on each requirement, a percentage out of 100% should be given to each component in the scoring. This allows you to prioritize each requirement for your firm to weigh the scoring. For instance, in some selection processes integration has a higher importance while in others, a requirement like pricing may be more important.

Select Vendor

I’m overwhelmed with the number of vendors; how do I narrow down my search or pick the right vendor for my firm?

This is a question I often get from firms thinking about new technology. I recommend a process that continuing narrows the number of vendors to make the process more manageable. At the outset I recommend casting a wide net and thinking about a wide range of possible vendor options. The initial list of possible vendors can be gathered through talking to other firms, doing online research, and reading industry publications. Consultants like myself can also help short-cut the process by having knowledge about vendors that meet the requirements laid out in the first step. This initial research identifies a list of vendors to send out the RFI to gather information. The list of vendors gets narrowed down to 2 or 3 by reviewing the RFI responses. This step includes filling out the vendor scorecard created earlier in the process from the vendor responses in the RFI. The scoring spreadsheet should not be the end all, be all for determining the final vendors, but provide a data point in the narrowing process. Additional information includes feedback from teams on the vendor cultural fit with your firm.

Once the vendor list has been narrowed to 2 or 3 finalists, the next step is to schedule detailed demos with each vendor. All demos should have an agenda that is created by the firm and consistent across all vendors. For larger technology purchases, this can be a demo day that includes multiple sections where interested parties in the firm can participate in their area of interest. As part of the agenda I recommend having a vendor demonstrate implementing a solution specific to the firm. For instance, for a CRM product evaluation have the vendor implement a workflow for a process that you use at your firm.

After the demos, a firm has a wealth of information on each vendor and should be able to make a final selection. Not only should the firm feel good about the final vendor selection, but also have started the process of how the new technology will be implemented at your firm. At this point your firm should negotiate and sign the contract. For larger technology purchases there can be room for some negotiations. I recommend not telling your final choice that they are the selected vendors to try to maintain some negotiating leverage. In my experience, for larger deals in the fintech industry you can negotiate on price, length of contract, and terms of the agreement. Per the SEC Cybersecurity guidelines, firms are required to have standard cybersecurity terms they request in vendor contracts. I recommend adding standard contract requirements for other areas such as data ownership that you negotiate in to each vendor contract if possible.

Conclusion

Going through an organized, disciplined technology selection process helps to ensure a successful vendor selection and ultimately successful implementation for your firm. In addition to helping to select the correct technology for your firm, going through a thoughtful vendor selection process helps your entire firm feel confident in the selection and builds ownership in a successful implementation.

Through years of experience and successful implementations I have developed templates and a repeatable process to help firms through this process. I’ve helped many organizations successfully select and implement technology that worked for them. If you are interested in learning more about the process and templates, please reach out to me to learn more.